Question of the Day

Whose side of the story do you believe?

Travelers, with their wallets packed with plastic and a load of cash, are becoming increasingly unlikely to whip out traveler's checks to pay for their purchases.

"Traveler's checks are almost unnecessary for most people today," said Nancy Zebrick, vice president of industry relations at www.1travel.com, an on-line travel service.

Traveler's checks are taking a back seat to cash and plastic because of the abundance of bank machines and the worldwide acceptance of MasterCard and Visa debit and credit cards. And it's happening both here and abroad.

Last year, 57 percent of debit-card users said they would use their debit cards when traveling abroad, according to a Gallup Poll survey conducted for Visa.

The users said debit cards are "more convenient" than cash and checks.

Visa, which has its own brand of traveler's check, has even created its own TravelMoney card, a prepaid disposable card that gives the user 24-hour access to cash at the company's 530,000 automated teller machines worldwide.

Plastic-preferring travelers are putting a dent in the traveler's check industry. American Express, the largest issuer of the alternative currency, has seen its sales of traveler's checks remain flat for the past five years, fluctuating between $23 billion and $25 billion.

Traveler's checks, once considered a safer alternative to cash, are used to make purchases as if they are actual cash. However, users, who are supposed to sign the checks when they receive them and record their serial numbers, must sign the checks again when they are being used.

American Express introduced traveler's checks, its oldest product, in 1891. Visa and MasterCard began selling their own traveler's checks in 1979 and 1981, respectively.

For years, travelers were drawn to the sense of security they got from using those checks. If they were lost or stolen, they could be replaced within 24 hours.

But travelers have found that credit cards protect them from theft or unauthorized purchases as well, and they can get instant credit if needed.

In addition, the exchange rate overseas is usually better when making a purchase with a credit card.

A traveler has even more incentive to use his credit card if it is part of a frequent-traveler program in which the user racks up points with every purchase. The points can be redeemed for rewards like free hotel stays or airline miles.

The odds seem stacked against traveler's checks.

American travelers used cash 40 percent of the time while they were on domestic or international trips, according to a survey American Express conducted last year.

"People are spending that much cash that can be lost or stolen," said Melinda Mulcahey, director of public affairs for American Express. "When cash is gone, it's gone. It's silly when you can get traveler's checks back in 24 hours."

As a result of the stagnant sales American Express began making a push for the paper currency in late 1999 and started a national television advertising campaign earlier this year. As a result, the company yesterday reported a 10.6 percent growth in traveler's checks during the second quarter. The same growth was reported for the first quarter.

While American Express TV ads address the problem of travelers' wallets being stolen or lost, there are other problems that can occur when using plastic.

Travelers relying only on credit or debit cards run the risk of something going wrong, mechanically. For example, the magnetic strip could become demagnetized or a bank card could be stolen or lost, wiping out the checking account completely if not discovered, Miss Zebrick said.

Traveler's checks also can be used to budget a vacation. She said people who depend on credit cards spend more on their vacation than they planned compared with those using traveler's checks.

Whatever travelers decide to use, industry officials suggest bringing along more than one kind of payment.